Pound to Danish Krone Exchange Rate Edges Away from Worst Levels as Trade Fears Surge
Market concerns about global trade have made it easier for the Pound Sterling to Danish Krone (GBP/DKK) exchange rate to recover today. However, coronavirus ‘second wave’ fears are hitting both currencies.
Since opening this week at the interbank level of 8.23, GBP/DKK has been trending with a largely downside bias. GBP/DKK even touched on a low of 8.16, which was the worst level for the pair since March.
Today though, GBP/DKK is edging higher. Investors selling the Danish Krone (DKK) due to global trade concerns worsening. At the time of writing, GBP/DKK is trending just above the week’s opening levels in the region of 8.25.
Investors are hesitant to buy the Pound too much either though. Developments in the global coronavirus situation are likely to keep influencing forex movement.
Pound (GBP) Exchange Rates Weighed by Domestic Coronavirus and Brexit Outlooks
The Pound (GBP) has remained unappealing all week. There is simply little reason for investors to buy the British currency, as even better than expected data is undermined by fears of a ‘second wave’ of infections.
Concerns over Britain’s high number of infections, as well as uncertainty over the future of the Brexit process, are weighing heavily on Sterling.
According to Analysts at ING:
‘Negatives seem to be piling up for GBP as the UK may (a) face a second virus outbreak right as it attempts to re-establish normality, and (b) get caught in US protectionist fire,’
As for Brexit, the EU’s Chief Negotiator sounded optimistic on a deal, but said Britain needed to be more forthcoming in talks.
Danish Krone (DKK) Exchange Rates Hit as Global Trade Outlooks Worsen
The Danish Krone (DKK) is a currency pegged to the Euro (EUR). This means it moves in parallel with the Euro and is influenced by the same things that influence the Euro.
The Euro (EUR) has been hit today by various factors, such as rising strength in its rival the US Dollar (USD). On top of this, the Euro is weaker due to concerns that US-Europe trade tensions are worsening.
Global stocks drop as virus worries knock recovery hopes and mounting trade tensions battered market mood. Risk-off moves followed daily records for new cases in Florida and California, w/Texas also suffering. Bonds gain w/US 10y yields at 0.67%. Gold 1762. Bitcoin drop to 9.2k. pic.twitter.com/GIIVHgeYnQ
— Holger Zschaepitz (@Schuldensuehner) June 25, 2020
The latest Denmark retail sales data was much stronger than expected. Retail sales jumped to 9.4% month-on-month in May.
However, this was not enough to boost the Danish Krone higher as the Euro’s movement was the primary cause of movement.
Pound to Danish Krone (GBP/DKK) Exchange Rate Potential for Gains Limited
There will likely remain little reason to buy the Pound in the coming sessions. The British currency continues to see broad uncertainty in its outlook due to fears that the coronavirus will hit Britain harder than some other major nations.
A lack of notable UK data due in the coming sessions is likely to leave Sterling exposed to shifts in global risk-sentiment.
As for the Danish Krone (DKK), it will be driven by the Euro’s (EUR) strength. If the US Dollar (USD) continues to surge, the Danish Krone may see further weakness.
The Pound to Danish Krone (GBP/DKK) exchange rate’s potential for recovery may largely depend on how weak the Euro (EUR) becomes.